Basis to Choose Home Loan Tenure

How should I choose tenure?

If loan eligibility is a constraint, go for the longest possible tenure (some banks allow 25 years though most banks allow only up to 20 years). The maximum tenure is also restricted by your age at the end of the tenure. Thus, a 45 year old person cannot get a 20 year loan-since he will be long past retirement by then. So, he will be eligible only for a 15 year loan. However, if he is self-employed- then the bank may consider a 20 year loan since retirement age for self employed people is assumed at 65 by most banks.

Most people in their anxiety to pay off the home loan as quickly as possible, take on a longer than warranted EMI burden by restricting tenure.

Even if loan eligibility is not a constraint, you should opt for as long a tenure as possible with a no prepayment penalty option. This way you retain the flexibility of low EMIs and at the same time you can pre-pay the loan whenever you have surplus funds.

Subtract the existing loan amount from the total loan amount and that will be the amount of second loan you are eligible for.

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